Wannabe buyers of Tesla EVs can now benefit from the $7,500 federal tax credit directly when purchasing a new Model Y or Model X Dual-Motor after the American manufacturer announced on its website that it can apply the point-of-sale rebate to the purchase price.
In other words, buyers of these two particular Tesla models won’t have to pay the full price of the car and then wait for the IRS to lower or eliminate their tax liability after the proper federal tax income forms have been filed.
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Tesla goes into the point-of-sale tax rebate game
Buyers of the Tesla Model Y and Model X Dual Motor can now benefit from the $7,500 tax credit when their vehicle is delivered, and not after they file their federal tax income forms. This means the effective purchase price is lower.
Suppose the buyers are eligible for the full tax deduction. In that case, they can transfer the credit to the dealer–in this case, Tesla–who can apply the reduction to the purchase price at the time of delivery, and then it will get its money back from the federal government. It’s much easier for the person purchasing the car, but there is some fine print that needs to be considered.
It’s the buyer’s responsibility to ensure all the requirements are met, otherwise the IRS will demand a reimbursement of the tax credit. When buying from Tesla, the MSRP of the EV must not exceed $80,000 (Model Y or Model X), and there are adjusted gross income (AGI) limitations that need to be met: $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers.
As for leasing, all Tesla EVs can theoretically benefit from the tax credit. When leasing, the dealer (or the manufacturer in this case) is the actual owner of the vehicle, and because it’s a business and not an individual, it can apply for the so-called commercial vehicle tax credit, which can then trickle down to the lessee. It’s a loophole that works for every EV maker, not just Tesla, as long as the dealer chooses to pass on the benefits.
So, what does this mean, money-wise? Well, the most affordable Model Y can be had for just $36,490 instead of the regular $43,990 if the buyer qualifies for the tax credit, while the Dual Motor Model X’s price as delivered goes down from $79,990 to $72,490.
While those buying the bigger and more expensive Model X can benefit from a 9.3% reduction in the purchase price, those opting for the Model Y will experience a more impressive cut of 17%.
At the time of writing this article, the newly-released Model 3 “Highland” electric sedan (in the U.S., at least) doesn’t qualify for the tax credit when purchasing, but the rebate might be available when leasing, so do your homework before committing to a new car. The refreshed Model 3 starts at $38,990 without any incentive.